It seems that every mention of Tesla we see NIO stock mentioned as well. Some of the recent rise in NIO stock has been investors pushing the entire EV space higher and looking for the next Tesla. Now some well-known short-sellers are calling a top in Tesla stock. We aren’t bold enough to say Tesla stock has topped out, but we believe that its valuation has gotten a little rich and that there are better bets out there. Our top EV stock recommendation is NIO and this article lists 11 reasons why Tesla investors should sell TSLA stock and buy NIO stock.
About NIO Stock
First up, before we get into the investment case for NIO stock, here’s a little background info on the company. NIO Inc. is a pioneer in China’s premium smart electric vehicle market. NIO designs jointly manufacture and sell smart and connected premium electric vehicles, driving innovations in next-generation technologies in connectivity, autonomous driving, and artificial intelligence.
NIO began deliveries of the ES8, a 7-seater high-performance premium electric SUV in China in June 2018, and its variant, the six-seater ES8, in March 2019. NIO officially launched the ES6, a 5-seater high-performance premium electric SUV, in December 2018 and began deliveries in June 2019. NIO officially launched the EC6, a 5-seater smart premium electric Coupe SUV, in December 2019 and plans to commence deliveries in 2020.
Reasons To Be Bullish On NIO Stock
First, the current technicals are very favorable for NIO stock. Shares held the critical $10 support level after Goldman Sachs lowered its rating. We were the first ones out to rebut Goldman and told our readers and subscribers to ignore anything Goldman says, which you can read here. Furthermore, NIO stock is trading above the 20-day, 50-day, and 200-day moving averages. Lastly, the RSI is turning higher signaling that a bull run is coming.
NIO stock has been on a steady trajectory higher but has not skyrocketed like Nikola stock. That could all be about to change.
Third, July sales figures will be coming out next week. We are expecting a big number and to drive shares of NIO stock higher once the news hits the tape. The word out of China is that NIO sales are crushing estimates.
Fourth, NIO announced via WeChat on July 18 that its 50,000th mass-produced vehicle roll off the production line at the JAC-NIO Advanced Manufacturing Center in Hefei, only 783 days after the first one coming out.
Fifth, NIO is set to announce the price and technical configurators of its third production model, the NIO EC6, at the forthcoming Chengdu Motor Show 2020, and afterward start delivering the vehicle in September. Unveiled at the NIO Day Event held on December 28, 2019, the EC6 is deemed as the coupe version of the ES6 SUV. This is another catalyst that will drive shares of NIO stock higher over the next few weeks.
Sixth, NIO has the necessary infrastructure in place to dominate the EV market. The company’s app lets you reserve a charging space at one of 17,000 points across China. Or you can hail a mobile Nio Power Van to your place of work, which will add 60 miles in 10 minutes. Tesla lacks this functionality.
Seventh, Tesla does not use swappable batteries, while NIO does. NIO has a network of 40 battery-swap stations along key intercity motorways; book a slot, and a robot will replace your battery with a fully charged one in just 5min 20sec. Simply pull up to the unit, staff will reverse your car in and robots do the rest.
Eighth, right now NIO is focused solely on China. The company’s strategy is to perfect its business in China and then rapidly expand across the globe. NIO’s Munich design studio is already working on models for the international market.
Ninth, just like Tesla in the US and its loyal buyers, NIO has cultivated the same in China. Nio aims to make owning its cars more like a private members’ club. Users can visit 13 Nio Houses dotted across the major cities, where they can use cafes, auditoriums, libraries, and hot-desking areas for work or pleasure.
Tenth, NIO buyers are eligible for subsidies from the Chinese government whereas Tesla is not. The subsidy to purchase EVs under 300,000 yuan only applies to manufacturers that use swappable batteries.
Eleventh, Nio Inc sports a valuation of just $14 billion compared to Tesla’s $292 billion market cap. In Q2, Nio delivered 10,331 electric SUVs compared to Tesla delivering 90,650 vehicles in Q2. If you value NIO Inc on a per-car delivery basis with Telsa, it should have a current market cap of $32 billion, or a $32 share price today.
These are just 11 reasons why to be bullish on NIO stock over Tesla. NIO is firing on all cylinders as the company and William Li become the Tesla and Elon Musk of China. If things keep going as they are, things might be different in the future. We might be calling Elon Musk and Tesla the William Li and NIO of America. For these reasons, NIO stock looks to be the better bet.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in NYSE:NIO or any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article.